May 23, 2022

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Twitter is not acquired by Elon Musk.  Poison pill strategy

Twitter is not acquired by Elon Musk. Poison pill strategy

Twitter’s management has armed itself against billionaire Elon Musk’s takeover of the company, the BBC writes. To this end, the company has adopted a strategy known as the “poison pill”.

On April 4, information appeared on the market that the Tesla boss had a 9.2 percent stake. Twitter shares, becoming the company’s largest single shareholder. The Tesla and SpaceX chief revealed in regulatory documents in recent weeks that he has been buying shares in nearly daily payments starting Jan.

This week, Musk offered about $43 billion ($54.20 per share) to buy Twitter. Musk described this price as his best and last offer, although he did not provide any details on the financing. Offer is not binding.

“From the moment I entered into this investment, I realized that the company would not thrive and would not serve society in its current form. Twitter must be turned into a private company,” Musk wrote in a letter to Twitter CEO Brett Taylor, citing Reuters.

“This is my final best offer, and if it is not accepted, I will have to reconsider my position as a shareholder,” Musk stated.

Poison pill strategy

Twitter authorities want to prevent Musk’s takeover of the company. The board decided to adopt a plan to limit shareholder equity, a strategy known as the “poison pill.” The move aims to prevent any shareholder from getting more than 15 percent. shares in the company. The approved plan of the year (expiring April 14, 2023) aims to ensure that anyone who controls Twitter by buying shares on the open market, will pay all shareholders an appropriate control premium.

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Twitter’s board detailed its defense plan to the US Securities and Exchange Commission (SEC) and issued a statement saying it was necessary due to “Mr. Musk’s non-binding proposal to acquire Twitter.”

A hostile takeover is when one company attempts to take over another company against the will of its management.

Josh White, a former SEC economist, told the BBC that the “poison pill” was “one of the last lines of defense against a hostile takeover”. “We call it the nuclear option,” he said.

White stressed that the administration made it clear that it “did not consider Musk’s offer high enough, and because the billionaire indicated that he did not want to negotiate a higher price, Twitter management chose the “toxic pill.”

White was surprised by Musk’s negotiating tactics. He noted that if his ultimate goal was to take over the business, he might not be the right one. “I think if he was really serious about the takeover bid, he would start at the right price and leave the window open for negotiation,” the economist explained.

Musk criticizes Twitter

Musk is a regular Twitter user with over 80.5 million followers. The billionaire has criticized the social media platform in recent weeks, largely due to its belief that it does not adhere to the principles of free speech.

As Reuters reports, Twitter has angered supporters of Donald Trump and other far-right politicians whose accounts have been suspended for violating content standards related to violence, hate or harmful misinformation.

Musk has described himself as an “absolute free speech,” but he’s also known for blocking other Twitter users who question him or disagree with him.

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Elon Musk – the richest man in the world

According to the Bloomberg Billionaires Index, Elon Musk’s fortune is estimated at $259 billion. He is by far the leader of the list of the richest people in the world. The Bloomberg Billionaires Index is a ranking of the world’s richest people. It is updated every day after the listing on the New York Stock Exchange closes.

Jeff Bezos comes in second with assets estimated at $180 billion. Bernard Arnault on the lowest step on the podium – 142 billion dollars.

BBC, Bloomberg, TVN24 Business

Main image source: Michael Vi / Shutterstock.com, Patrick Ball / dpa-Zentralbild POOL / PAP